What a year.
What started as “business as usual” in January, quickly escalated into a full-on market meltdown thanks to the current global pandemic. Yes, things looked bleak in March when even the SPAC IPO window shut temporarily. But sure enough, the SPAC market came roaring back to life in April, initiating a never before seen phenomena for SPACs….popularity.
This was a year that saw a record number of IPO issuance combined with a record rate of returns. So, for an asset class that used to be referred to as a “so called” Blank Check Company, it felt a little peculiar. Meaning, for those of us who have been around SPACs for awhile, and in particular, those who lived through the SPAC dark ages of 2008-2016, there was a lingering sense that this new found popularity would go away soon and we would go back to being the underdogs of the alternative IPO structures.
However, the opposite happened. SPACs have continued to make gains while also continuing to evolve the structure and attract top notch sponsors. This year has seen so much change for SPACs it’s hard to quantify and sum up the highlights.
Nonetheless, as we close out 2020, it seemed fitting to honor the best of an incredibly generous year. As a result, we have created the SPACInsider Awards where we highlight deals, teams, sponsors and bankers we have chosen as standouts in a market crowded with notable participants. However, before we begin it should be noted how challenging it was to select the following winners. There were more than a few “Zoom debates” on ultimately choosing the winners, but truthfully, we wanted to give many more awards since the category was so rich with candidates this year. Ultimately though, these were our final selections.
The Diamond Eagle/DraftKings combination, hands down, won our Deal of the Year award as best SPAC combination of 2020. It should be noted that this deal not only announced and closed its combination ahead of the SPAC frenzy that started this year in June, which meant it was slightly handicapped compared to the current deals and giving it extra points for being a successful deal without the current wind at its back, but it also happened to close on April 24, 2020, smack dab in the middle of the early pandemic when the world was effectively shut down. And yet, DraftKings still managed to close that day at $19.35. Which, pre-2020, was an extremely rare closing price. However, even more notable is that DraftKings is a revenue generating company. And further to that it’s in an extremely hot sector – gambling. But maybe more noteworthy is that DraftKings, like Virgin Galactic, caught the attention of the populus at large, and thus, educated the public on the SPAC product. It was a high profile deal and was covered extensively in the media and as a result, it did solid missionary work getting people talking about the SPAC product. This deal also brought SPACs into focus for retail, which, as we all know by now, has been a major driver in SPAC popularity and performance this year as well. All total, one could say that DraftKings finished what Virgin Galactic started by putting SPACs on the map, but with a solid revenue generating company, a highly visible name brand, and a successful serial SPAC team (Eagle) leading the acquisition. For those reasons, it was a unanimous decision to call the Diamond Eagle/Draftkings SPAC Combination Deal of the Year. Well Done.
This was a tough category given that 2020 has been chock full of innovation and stellar deal teams. Truth be told, we could have named five other SPACs to this category, but alas, we have to pick one. And of all the standouts this year, Dragoneer II landed in the top spot. Specifically because of their ability to IPO, as a non-biotech focused SPAC, with just a share. No warrants, no rights, and 100% in trust. And even despite that, they still managed to trade as high as $11.23 on their first day of trading. However, Dragoneer II gets the Best SPAC IPO of the Year award for elevating the SPAC asset class by trying something that hadn’t been done before and makes the product more attractive to target companies. There are clearly high hopes for this team to bring back a winning deal, but they’re already off to a good start.
A lot has been covered already about Chamath Palihapitiya and SPACs, but the primary reason for choosing him as SPAC Sponsor of the Year is his commitment to the SPAC Asset Class. After successfully completing Social Capital Hedosphia’s first deal with Virgin Galactic (SPCE), Chamath has since announced and closed Social Capital II (Open Door) and should be closing Social Capital III (Clover Health) in the next two weeks. Plus, he also IPO’d three more SPACs simultaneously in October (IPOD, E and F) raising a combined $2.4 billion in one day. More importantly, Chamath Palipapitiya commits his own money to his transactions to the tune of $100M each, aligning his interests with investors. But that’s not all because he has also invested money in other SPAC transactions via the PIPEs for both Trine Acquisition Corp.’s Desktop Metal (DM) and INSU acquisition Corp. II’s (INAQ) announced combination with Metromile. However, his sheer marketing prowess and ceaseless promotion of the SPAC product make him the best all-around SPAC Sponsor of the year.
Where to begin…Credit Suisse is not only consistently at the top of the league tables in deal volume, but they lead in deal quality. Nearly every investor, banker, lawyer, auditor and SPAC team we have spoken to believes Credit Suisse is the team to beat. They are the “King” (and Queen) makers having successfully completed IPOs for teams this year such as Social Capital Hedosophia, Cohn Robbins, Foley, JAWS, and CC Neuberger. They have also managed to consistently de-SPAC first-rate combinations such as Star Peak Energy (STPK) and again, Social Capital Hedosophia II & III (IPOB and IPOC), JAWS, and Foley Trasimene (BFT). Not an easy feat and the equivalent to being able to play both offense and defense. You can be sure Credit Suisse will come out of the gate roaring in 2020, but the thing that makes them Best SPAC Bank of the Year, is their consistent focus on quality in the face of tremendous quantity.
BEST SERIAL SPAC ISSUER
Given that the Fintech team just announced their combination this morning with Perella Weinberg for Fintech Acquisition Corp. IV (FTIV), this feels timely. The Fintech team, led by Betsy and Daniel Cohen, have been prolific SPAC issuers this year, but importantly, they consistently deliver excellent results. This team has closed three Fintech Acquisition Corp. SPACs to-date. Their first combination was with Cardconnect, which ultimately was bought by First Data for $15.00 a share. Their second and third combinations were with International Money Express (IMXI) and Paya (PAYA), which are currently trading around $15.88 and $13.86, respectively. This morning’s Fintech IV announcement has resulted in FTIV trading near $11.31. Pretty good for a deal announcement in what is arguably the slowest week of the year. Plus, let’s not forget Daniel Cohen’s recently announced deal for INSU Acquisition Corp. II with Metromile, which has the share price trading near $15.00 (INAQ). It’s tough to have one successful SPAC transaction, but this team keeps knocking it out of the park. The Fintech team still has Fintech Acquisition Corp. V (FTCV) and FTAC Olympus (FTOC) out searching for a combination, but with consistent results like this, it’s a pretty good bet they’ll deliver.
Lastly, we have a People’s Choice award for SPAC of the Year. You have 10 candidates to choose from and we’ll announce the winner in the next newsletter.